Q1 results below expectations in Saudi

04/05/2010 00:00 AST

Banks and other companies trading their shares in the Saudi stock market performed relatively well in the first quarter of 2010 but the results were below expectations, a key investment firm said yesterday.

The net profits of the more than 100 companies listed on Tadawul bourse were above those achieved in the same period of 2009 and nearly 30 per cent higher than in the fourth quarter of 2009, the Riyadh-based Jadwa Investments said in a study on the performance of Saudi companies.

"Results of listed companies for the first quarter of 2010 were generally uninspiring. Total earnings were well up on the equivalent quarter of last year, but this was anticipated given that the low point for the global economy and most financial markets and commodity prices was during the first quarter of 2009. While earnings were up nearly 30 per cent on the final quarter of last year, in many cases they were below analysts' expectations," it said.

"Nonetheless, the growth in earnings reinforces our view that the economy is picking up. The Tadawul Stocks Index (TASI) is little changed since the beginning of the result announcements and we are comfortable with our projection for end-year fair value of 7,400."

On a sectoral basis, petrochemicals led the way in year-on-year terms, owing largely to higher product prices and greater sales volumes, Jadwa said. "Petrochemicals was the clearest beneficiary from the pickup in the global economy over the last 12 months."

Turning to banks, it said the result of the Gulf Kingdom's 12 commercial banks fell short of analysts' expectations, though they were well up on the fourth quarter, when large sums were set aside to cover bad debts.

Lower income on lending because of credit tightness and ongoing provisions for bad loans inhibited bank performance, the report said.

Jadwa gave no figures for the banks' results but their balance sheets published in Saudi newspapers last week showed the combined net earnings of the 12 banks dipped by about three per cent to nearly SR7.189 billion (Dh7.04bn) in the first quarter of 2010 from SR7.418bn in the first quarter of 2009.

But their consolidated assets grew by nearly 2.2 per cent to SR1.213 trillion at the end of March 2010 from SR1.186trn at the end of March 2009. The highest income was achieved by Al Rajhi Group at SR1.68bn although it was nearly 2.7 per cent below its profits in the first quarter of 2009.

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